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USAIR, INC. EMPLOYEE SAVINGS PLAN
Financial Statements and Schedule
October 31, 1993
(With Independent Auditors' Report Thereon)
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Table of Contents
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Page
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Independent Auditors' Report 1
Financial Statements:
Statement of Net Assets Available for Plan
Benefits as of October 31, 1993 2
Statement of Changes in Net Assets Available for
Plan Benefits for the ten month period ended
October 31, 1993 3
Notes to Financial Statements 4-8
Schedule I - Item 27a
Schedule of Assets Held for Investment Purposes
as of October 31, 1993 9
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Independent Auditors' Report
The Plan Administrator and Participants
USAir Inc. Employee Savings Plan:
We have audited the accompanying statement of net assets available for plan benefits of the
USAir, Inc. Employee Savings Plan (the Plan) as of October 31, 1993, and the related
statement of changes in net assets available for plan benefits for the ten-month period then
ended. These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets available for plan benefits of the Plan as of October 31, 1993, and
the changes in net assets available for plan benefits for the ten-month period then ended
in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the financial statements taken
as a whole. The supplemental schedule of assets held for investment purposes as of
October 31, 1993 is presented for the purpose of additional analysis and is not a required
part of the basic financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
January 14, 1994
1
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
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October 31, 1993
<CAPTION>
Assets:
<S> <C>
Beneficial interest in USAir, Inc. master trust
fund (note 2) $ 97,198,147
Loans receivable 2,423,546
Employee contributions receivable 1,285,383
Employer contributions receivable 418,624
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Net assets available for plan benefits $ 101,325,700
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See accompanying notes to financial statements.
2
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
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Ten-month period ended October 31, 1993
<CAPTION>
Additions to net assets attributable to:
<S> <C>
Net investment gain from master trust $ 11,257,734
Interest income on employee loans 93,877
Employee contributions 25,446,581
Employer contributions 8,524,773
Rollover contributions 237,569
Transfer from the USAir, Inc. 401(k) Plan 56,592,761
Transfers from other plans 19,848
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Total additions 102,173,143
Deductions from net assets attributable to:
Employee distributions 821,173
Administrative expenses 12,163
Other expenses 14,107
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Total deductions 847,443
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Net increase in net assets available for plan
benefits 101,325,700
Net assets available for plan benefits:
Beginning of year -
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End of year $ 101,325,700
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See accompanying notes to financial statements.
3
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
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October 31, 1993
(1) Description of Plan
The following brief description of the USAir, Inc. Employee Savings Plan (the Plan)
is provided for general information purposes only. Participants should refer to the
Plan document for more complete information.
(a) General
The Plan is a defined contribution plan intended to be a qualified cash or
deferred arrangement under Section 401(k) of the Internal Revenue Code, as
amended (the Code) and to qualify under Section 401(a). The Plan was
established on January 1, 1993 for all non-contract employees of USAir, Inc.
(USAir or the Company). All salaried and certain union employees who are
at least 18 years of age and have completed 90 days of service, except for
those individuals not covered by the United States income tax laws, are
eligible to participate in the Plan. The Plan is subject to the provisions of the
Employee Retirement Income Act of 1974 (ERISA).
(b) Plan Contributions
USAir employees electing to participate in the Plan make contributions to the
Plan via payroll deductions. The amount of contribution that may be made
by a participant to the Plan shall be a whole percentage of not less than one
percent nor more than 13 percent of a participant's compensation. Compen-
sation includes base pay, overtime, bonuses, shift premiums and shift
differentials, up to the 401(a)(17). Contributions for 1993 can not exceed the
statutory limit of $8,994.
The Company will make a matching contribution to the Plan in an amount
equal to 50% of a participants contribution up to a limit of two percent of
his/her compensation.
The Company will also make a profit-sharing contribution to the Plan on
behalf of each participant in an amount equal to a certain percentage based
on the profit margin of USAir Group, Inc. No profit-sharing contributions
were made during the ten-month period ended October 31, 1993.
4
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(c) Vesting
Employer contributions are 100% vested after the participant has completed
two years of service; all other contributions are fully vested at all times.
(d) Investment Options
The Company selects the number and type of investment options available.
The investment options are held and administered as separate, common funds
by Fidelity Investments.
Each participant elects the percentage, in increments of 5 percent, in which
his/her account balance is invested in the various investment funds. The
participant may transfer his/her investments from one investment fund to
another investment fund.
A separate account is established and maintained in the name of each
participant and reflects the participant's contributions invested in, and the
earnings and losses attributed to, each investment fund less certain investment
related administrative expenses. Participants are allocated a share of each
fund's net investment earnings based upon their account balance as a
percentage of the total fund balance. Net investment earnings are allocated
to participants.
(e) Loans and Hardship Withdrawals
All participants can borrow from their account but may have only one loan
outstanding at a given point in time. Loans are to be repaid, with interest,
within five years unless the loan is used by the participant to acquire a
principal residence. Loans are limited to the lesser of $50,000 (reduced by
outstanding loan balances from any other plan maintained by the Company)
or 50 percent of the participant's separate account balance as of the date of
the loan.
Upon approval from the Company, a participant may withdraw his or her
contributions from the account if it is determined that the withdrawal is
necessary to meet an immediate and heavy financial need of the participant
under the deemed hardship standards set forth in the Code.
5
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
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(Continued)
(f) Distributions
Distribution to a participant or beneficiary is made as soon as reasonably
practicable after the participant's separation from service with the Company
due to death, retirement, or other termination of employment. The
distribution can be deferred or provided in cash as a lump sum distribution.
If the balance due to the participant or beneficiary is less than $3,500, a lump
sum distribution is automatic upon separation.
(g) Forfeitures
Forfeitures of terminated participants' non-vested accounts are applied against
future employer contributions.
(h) Administrative Expenses
Substantially all of the administrative expenses of the Plan are paid by USAir,
Inc.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared on an accrual
basis and present the net assets available for plan benefits and changes in
those net assets.
(b) Master Trust
The assets of the Plan are maintained in a master trust with the assets of
other defined contribution plans sponsored by USAir, Inc. The trustee,
Fidelity Management Trust Company, maintains the master trust under the
terms of an agreement with the Plan. The Plan's share of assets and changes
in its share of the master trust have been reported to the Plan by the trustee
as having been determined through the use of fair values of all assets. Fair
values for assets were determined by quoted market values, when available.
6
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
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(Continued)
(3) Investment Options
The following table presents the activity for each investment option for the Plan's beneficial interest in the master trust,
for the ten-month period ended October 31, 1993:
<CAPTION>
Retired Total
Government Fidelity Fidelity Fidelity Fidelity USAir (Beneficial
USAir Money Magellan Intermediate Equity U.S.Equity Common Interest In
GIC Market Fund Bond Fund Income Fund Index Fund Stock Fund Master Trust)
--------- --------- --------- ---------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Balance,
January 1, 1993 $ - $ - $ - $ - $ - $ - $ - $ -
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Transfer from the USAir, Inc.
401(k) Plan 6,843,206 7,024,752 22,705,571 4,734,769 10,001,963 3,299,537 788,365 55,398,163
Net investment gain (loss)
from master trust 459,063 194,217 7,047,426 741,703 2,365,441 456,484 (6,600) 11,257,734
Contributions 2,980,685 3,501,607 13,415,196 3,825,367 5,320,020 2,943,954 518,087 32,504,916
Net exchanges between
investment funds (80,773) (720,418) 742,862 (210,308) 365,885 (267,257) 170,009 -
Administrative expenses (4,744) (219) (5,785) (191) (301) (17) (906) (12,163)
Employee distributions (66,541) (172,581) (324,019) (82,014) (142,233) (28,891) (4,894) (821,173)
Transfers from other Plans 1,714 14 15,699 715 1,658 19 29 19,848
Net loan activity (177,212) (179,028) (536,722) (112,800) (148,761) (70,044) (18,488) (1,243,055)
Interest on loans 9,412 8,343 41,890 8,850 15,794 6,955 2,633 93,877
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Net increase in
investment option 9,964,810 9,656,687 43,102,118 8,906,091 17,779,466 6,340,740 1,448,235 97,198,147
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Balance October 31, 1993 $9,964,810 $9,656,687 $43,102,118 $8,906,091 $17,779,466 $6,340,740 $1,448,235 $97,198,147
========= ========= ========== ========= ========== ========= ========= ==========
7
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
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(Continued)
(4) Concentration of Credit Risk
The Plan's beneficial interest in the master trust includes certain investments in
guaranteed investment contracts (GICs). The issuers of the GICs are all insurance
companies. The Plan's ultimate realization of amounts invested in GICs is
dependent on the continued financial stability of the insurance companies that are
issuers of the GICs. The Plan's beneficial interest in amounts invested in GICs is
$9,964,810 at October 31, 1993.
(5) Transfer from the 401(k) Plan
The Company also sponsors the USAir, Inc. 401(k) Savings Plan (the 401(k) Plan).
Prior to 1993, all employees were eligible to participate in the 401(k) Plan. Effective
January 1, 1993, the balances of all non-contract employees previously participating
in the 401(k) Plan were transferred into the Plan, including loans receivable.
(6) Federal Tax Status
Although the Plan has not requested a letter of determination from the Internal
Revenue Service as to its qualification, the Company and its general counsel believe
the Plan meets the requirement of Section 401(a) of the Code and is therefore
believed to be exempt from federal income taxes.
(7) Plan Termination
The Company reserves the right to terminate the Plan at any time. Upon
termination of the Plan, the following actions shall be taken for the benefit of
participants:
(a) As of the termination date, each investment fund shall be valued. In
determining the net worth of the investment funds there shall be included as
a liability such amounts as shall be necessary to pay all expenses in connection
with the termination of the investment funds and the liquidation and
distribution of the property of the funds, as well as other expenses, whether
or not accrued, and shall include as an asset all accrued income.
(b) All participant accounts shall then be disposed of, to, or for each participant
in single lump-sum payments.
8
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Schedule I
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USAIR, INC.
EMPLOYEE SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
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October 31, 1993
Identity Description Cost Current Value
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Participant loans Interest rates range from $ - $ 2,423,546
receivable seven percent to 10.5 ========== ==========
percent per annum
9
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CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
USAir Group, Inc.:
We consent to the use of our reports dated February 26, 1993 included in the
Annual Report on Form 10-K filed by USAir Group, Inc. and USAir, Inc. for the
year ended December 31, 1992, incorporated herein by reference. Our reports
covering the December 31, 1992 consolidated financial statements refer to a
change in the method of accounting for postretirement benefits other than
pensions.
/s/ KPMG Peat Marwick
KPMG Peat Marwick
Washington, D.C.
January 28, 1994
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